Accounting software for sole traders

As a sole trader, you’re the only one who runs and owns your business. This means that you’re entitled to keep all the profits it makes after tax has been paid, but you’re also liable for all losses.

You can register as a sole trader with HMRC online. You’ll need to provide some personal and business information, like your National Insurance Number. When you register as a sole trader, you’ll have access to online services from HMRC. If you’re registered for VAT you can easily connect your HMRC account to QuickBooks to submit your VAT returns online.

You’ll need to pay Self Assessment Income Tax. Depending on your profits you will need to pay Class 4 National Insurance. From 6 April 2024 Class 2 National Insurance are treated as being paid, but you are still able to pay voluntary contributions if you want to avoid gaps in your record.

You’ll want accounting software that can help with basic tasks like tracking time, sending invoices, managing expenses, preparing for Self Assessment and submitting your VAT returns in line with the most up to date Making Tax Digital regulations.

QuickBooks Sole Trader is ideal for sole traders who aren't (and aren't likely to be) registered for VAT. If you think you're going to start paying VAT, or may become a limited company, you will need a different QuickBooks plan.

QuickBooks Simple Start, Essentials, Plus and Advanced are all suitable for VAT registered businesses and limited companies. You can move to a different QuickBooks plan as your business and needs grow.

You’re not required to use an accountant–you can simply file your own Self Assessment return. If you’re diligent about keeping track of your finances and invoices, filing your Self Assessment on your own doesn’t have to be daunting–especially with the help of accounting software like QuickBooks.

QuickBooks can help you stay on top of your books as well as send invoices, track expenses, prepare self assessment, calculate VAT and see how your business is doing in real time–all in one place.

You need to keep a record of the following:

• All sales and income
• All business expenses
• VAT records (if you’re registered for VAT)
• PAYE records (if you employ people)
• Records about your personal income

When you submit your Self Assessment tax return, you do not need to send in your records. But, you do need to keep them so you can calculate your profit or loss for your Self Assessment return and to show HMRC (if requested). These records must be accurate.

An accountant or bookkeeper can help support the success of your business so we’d advise working with one if you can. If you don't already have one, search QuickBooks ProAdvisor to find a certified accountant or bookkeeper who’s eager to assist you with using QuickBooks. All QuickBooks Online plans enable you to collaborate with your accountant or bookkeeper directly in your books.

The government's Making Tax Digital (MTD) initiative is aiming to modernise and shift the Income Tax system online. From April 2026, both self-employed business owners and landlords with an annual qualifying income of £50,000, or over, and £30,000 or over from April 2027, will first be impacted by MTD for Income Tax. Income from all relevant sources will count towards your qualifying income.

QuickBooks will be able to help you comply with all your MTD obligations. Whether you need to send your quarterly updates, finalise your annual income through the End of Period Statement or submit your Final Self Assessment Declaration, you’ll be able to do it all with the help of QuickBooks.

We plan to make our MTD for Income Tax available in all products*. This means that, whichever QuickBooks plan you are on, MTD Income Tax functionality will soon be available to you.